Life is just a string of disappointments. As Reform was winding up to announce its Scottish leader, my fingers were firmly crossed – let it be Winston from Still Game. He’d be perfect – angry old white man at war with the world. But nope, that was always too good to be true. It’s Malcolm Offord.
On the other hand, there is a group of people who never disappoint; central bankers. Eras come and go, crisis mount upon crisis, finance brings the economy down then inflation lays waste which the bankers ‘cure’ with unemployment and the world careers further and further towards chaos and universal disillusionment.
And yet one thing remains entirely reliable – the central banker belief that they are responsible for none of this. The poor souls are there, sent by god to try and save us all from ourselves, and yet the mortals don’t understand the sacrifice they make on our behalf. It’s not easy you know, making unpopular decision that ruin other people’s lives.
At least that’s what you’d derive from Andrew Bailey. At the end of last week he was warning people about the dangers of populism. He had quite a clear sense of what populism is and so was entirely adamant that it had to be stopped.
So what exactly is Andrew Bailey’s vision of populism? It has three components that bother him. First, he identifies a ‘tendency towards domestic production’, which he sees as a challenge to ‘international openness’. In other words, offshore the good jobs and then be glad of a minimum wage job stacking shelves.
It is quite remarkably tone deaf in this day and age to be championing, unqualified, an economic system that even its greatest advocates would admit has hit large groups in society hard. You have to be at some remove from the experience of ordinary people if you think that this has been a universally good experience.
But then again, you also have to work hard to not remember the cost of living crisis which used breakdowns in long supply chains as an excuse for rampant profiteering given that countries can no longer meet their own basic needs largely from domestic production. Security second; ideology first, says Mr Bailey.
It’s someone else’s fault when central bankers screw up but when people are hit by austerity and the cost of living crisis, attributing blame is verbotten
The second disaster of populism (he thinks) is the process of ‘attributing unfavourable conditions to outside forces’. This in itself shows an absolute ignorance of what populism actually is because in its proper sense populism is about attributing unfavourable conditions to inside forces like immigrants. It is the ‘enemy within’ which defines populism, not the enemy without.
And yet are we saying that outside forces are not responsible for our malaise? I mean it is the (dishonest) orthodoxy of Bailey’s City of London that the 2008 banking crisis was not their fault but entirely a blow-over from reckless behaviour in the US. It is them who claim external malignant forces caused it.
So make up your mind guys – is the problem you lot or not you lot? Were you not also blaming Putin’s invasion of Ukraine for all this? Or energy prices more generally? Or Chinese imports? Are these not ‘outside forces’? What is this, pick and mix? It’s someone else’s fault when you screw up but when people are hit by austerity and the cost of living crisis, attributing blame is verbotten?
The third element of Bailey’s nightmares is that populists are undermining trust in domestic and international institutions. Now here he has at least some more legitimate point to make, but only if you have partial hearing. Because let’s not kid on that these institutions have not done rather a lot of work of undermining confidence in themselves.
Globally, who are we meant to trust? The International Monetary Fund and its reign of destruction across Africa and South America? The United Nations Security Council and its decisive action on Gaza? The European Union’s Commission and pathetically weak negotiations over a US trade deal?
Or what about home? Who has devalued Westminster? Populists or a bunch of anti-populists who were claiming expenses for a duck house? Who were taking cash in brown paper envelopes to ask questions for corporate clients? Whose denizens endlessly parlay their democratic mandates into personal enrichment or lifelong sinecures in the House of Lords?
What other institutions did the populists undermine? Was it them who sent spycops out to impregnate activists? Are they the people who set up all those awful, offensive racist WhatsApp groups that seem to define life in the Metropolitan Police? Was it populists who claimed there were weapons of mass destruction in Iraq?
Or let’s look closer to Mr Bailey’s home – did the financial conduct authority act in the public interest to prevent unstable, risky banking practices which were to bring down the economy? Of for that matter, how many of the rest of us engaged in the kind of economy-destroying gambles the entire finance sector was engaged in?
I trust it is clear that Andrew Bailey is demanding that politics be kept out of central banks so that he can maintain and protect his own political ideology and force it on the rest of us with no real democratic mandate to do so and none of those most likely to be affected having any say over any of it.
The argument behind all of this is that there is a moral hazard in letting politicians set interest rates because they can’t stop themselves cutting interest rates to goose the economy before elections, even if it results in inflation.
But what about the moral hazard of a lot of wealthy bankers setting policy for each other with the express goal of boosting stock prices and assets which are overwhelmingly owned by the very, very rich? Or what about the fact that in protecting those assets it is doctrine that other people’s immiseration is a primary tool for doing that?
It isn’t just the deliberate act of pushing people into unemployment so people generally have less money and so less spending power, bringing down demand in the market and releasing a pressure valve on prices, it’s demanding that everyone else undergo pay restraint to achieve the same thing. Naturally you could tax the rich and achieve the same broad effect, but…
I am no longer in favour of central bank autonomy and Bailey’s comments reveal why – too much power, too one-sided in its wielding, no accountability
The big bogeyman that the bank holds over us is inflation. It is, they claim, bad for everyone. That is mostly true. Then again, so is wage restraint and higher unemployment. What they are desperate to hold onto is that the only tool for inflation is high interest rates and pay restraint. That places the burden of tackling inflation on ordinary people.
There are other options; for example price controls would mean that corporations shoulder the burden for bringing down inflation. Taxing excess profits is another option. But these aren’t discussed and are outside the purview of the bank. And I think that’s the point.
The Bank of England has lots of power to fuck over ordinary people like you and me but the power to fuck over powerful people is in government. It suits all concerned (i.e. all the rich people in consort with all the powerful people) that the body tasked to deal with this has only the powers to harm citizens and that it must be independently able to harm them to its heart’s content without interruption.
What no-one is really allowed to say is the truth; that Britain’s finance sector is bad for all of us and we’d all benefit if it was shrunk and kept under control. I am no longer in favour of central bank autonomy and Bailey’s comments reveal why – too much power, too one-sided in its wielding, no accountability. That is policy feudalism.
The world is falling apart and it was finance and corporate profiteering that caused it. Andrew Bailey should stick to shovelling enormous wealth into the pockets of rich people while he beats the rest of us with a stick. He’s good at that.
Capable of seeing that the rise of populism is a response to the abuses of central banks and out-of-control financiers and corporations? Able to understand that offshoring wasn’t good for most of us. And perhaps most gallingly, telling us that this is about raising standards of living by making people’s standards of living worse while making a tiny group of people ever more powerful?
Those central bankers; they’re nothing if not reliably out of touch with reality and the world.